Yen surges, dollar drops on June consumer price decline By Reuters

Money Bizwiz Team
2 Min Read

Welcome to our blog! Today we are discussing the recent drop in the dollar following the unexpected fall in consumer prices for June. The Japanese yen surged more than 2% as traders anticipate a potential interest rate cut by the Federal Reserve in September.

Speculation arose that Japanese authorities may have intervened to bolster the yen, which recently hit a 38-year low against the dollar. However, analysts believe the movement is more likely due to repositioning in the market rather than official intervention.

Steve Englander of Standard Chartered Bank mentioned the accumulation of long dollar/yen positions due to interest rate differentials between the U.S. and Japan. With a likely rate cut in September, these differentials are expected to shrink.

Data from Thursday revealed a 0.1% dip in the consumer price index for June and a 3% annual increase, the smallest in a year. Core prices rose 0.1% in June with an annual gain of 3.3%.

Fed Chair Jerome Powell expressed uncertainty about inflation hitting the 2% target sustainably but remains optimistic. Elevated inflation concerns in the first quarter have prompted expectations of a longer time frame for price reduction.

Market speculations for rate cuts have increased following softer details in the June employment report, with an 89% probability of a rate cut in September. The dollar has fallen to 104.36 against the yen, while the euro rose to $1.0872 against the dollar.

On the other hand, sterling reached an almost one-year high due to positive comments from Bank of England policymakers and strong GDP data. Huw Pill mentioned persistent price pressures, and economic output in Britain increased by 0.4% in May.

In the cryptocurrency market, bitcoin gained 0.85% to trade at $57,887. Overall, shifting market dynamics have led to changes in currency valuations, reinforcing the need for constant monitoring and analysis.

© Reuters. FILE PHOTO: Woman holds U.S. dollar banknotes in this illustration taken May 30, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

Share This Article
Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *